CSS 2023 Special Solved Pakistan Affairs Past Papers | Elite policy-making and Pakistan’s economy
The following question of CSS Pakistan Affairs 2023 Special is solved by Miss Iqra Ali, the best Pakistan Affairs Coach, on the guided pattern of Sir Syed Kazim Ali, which he taught to his students, scoring the highest marks in compulsory subjects for years. This solved past paper question is uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Question Breakdown
In this question, the examiner has asked you how elite capture of the policy-making framework has adversely impacted economic development in Pakistan? So, first, you need to briefly introduce the main points of what you are about to write in your answer. Then, provide details in the main body of the answer with supporting arguments, examples, or cases. Finally, end your answer with a critical analysis and conclusion. Remember, the following solved question provides a comprehensive answer covering all the main aspects. However, as far as the answer in the paper is concerned, limit yourself to 3 or 4 leading arguments against each part of the question.
Outline
1-Introduction
2-Understanding the Influence of Elites on Policy-Making in Pakistan
3-How Elite Capture of the Policy-Making Framework Has Adversely Impacted Economic Development in the Country?
- ✓ Concentration of the Political Power in the Hands of Few Obstructs the Economic Development
- Evidence: UNDP’s Pakistan National Human Development Report (NHDR) – “The three P’s of inequality are Power, People, and Policy”
- ✓Prioritizing Elites at the Expense of Small and Medium Enterprises (SMEs) Inhibits the Broad-Based Economic Growth
- Evidence: According to SMEDA, despite the establishment of 36 Common Facility Centres nationwide through PSDP funding, financial constraints have halted many SMEs.
- ✓Tax-Evasion and Regressive Tax- Systems are the Key Examples of Elite Influence that hinder Long-Term development
- Evidence: According to the Economic Survey of Pakistan, the tax-to-GDP ratio (federal taxes) fell to 9.6 per cent in 2019-20 against 10.1 per cent in 2018-19.
- ✓Abject Corruption in the Public Sector is a result of Elite Capture, exacerbating Fiscal Deficits and Weakening the Economic Progress
- Evidence: Corruption Perception Index (CPI) has ranked Pakistan 140th out of 180 countries
- ✓Elite Capture has Contributed to Weak Governance, Creating an Environment that Impedes Financial Success
- ✓Military Influence on the Policy Making has Shrinked Resource Allocation for Development
4-Critical Analysis– Suggestions to Deal With the Issue
5-Conclusion
Answer to the Question
Introduction
Elite capture on public policy refers to the stranglehold of a few powerful and influential groups, such as aristocrats, landowners, feudal, and their affiliated groups, which is determinantal for the economic success of the countries. Unfortunately, the elite supremacy in policy making is one of the problems Pakistan has faced throughout its history in achieving long-term economic growth and stability, where the significant political position of the Military, feudal landlords, and their affiliated groups granted them strong influence in the decision-making cadre. Although the aristocratic decision-making has cadred for the vested benefit of the elite in several ways, it has marred the country’s economic progress, such as by concentrating the political power in the hands of a few, obstructing economic development, and prioritizing affiliated groups at the expense of small and medium enterprises (SMEs) led to lack of broad-based economic growth. However, tax evasion and regressive tax systems are the key examples of elite influence that hinder long-term development. In addition, abject corruption in the public sector is caused by elite capture, exacerbating fiscal deficits. The elite capture has contributed to weak governance, fostering an environment that impedes financial success. Last, the military influence on policy has shrunk resource allocation for development. Hence, a pragmatic approach is indispensable to reduce the influence of elites on policy-making to gain long-term economic success.
Understanding the Influence of Elites on Policy-Making in Pakistan
The elite capture on policy-making is one of the challenges the country has faced throughout its history in achieving long-term economic growth and stability. The Military, feudal landlords, and their affiliated groups have a strong political position. Their strength encapsulates the fact that the state can’t remain politically stable without the help of these groups. Hence, the strong position of these groups in politics granted them strong influence in policy making. These credentials in politics make it highly unstable; thus, the individual interests of the influential groups always supersede the collective interests of society. Hence, the elite capture on policy-making played a role in undermining economic development and stability.
How Elite Capture of the Policy-Making Framework Has Adversely Impacted Economic Development in the Country?
- ✓ Concentration of the Political Power in the Hands of Few Obstructs the Economic Development
As discussed earlier, feudal, landlords, military, and affiliated groups hold an important political position. Thus, their political position grants them a significant place in the decision-making cadre. To grasp political power, they need large sums of money to influence policymaking. According to UNDP’s Pakistan National Human Development Report (NHDR) – “The three P’s of inequality are Power, People, and Policy”; however, privileges of the elite in Pakistan adds up to PKR 2,660 billion, equivalent to 8% of the GDP. However, the policies devised under the influence facilitate influential groups other than marginalized social groups.
- ✓Prioritizing Elites at the Expense of Small and Medium Enterprises (SMEs) Inhibits the Broad-Based Economic Growth
Unfortunately, the economic policies under the influence of elites are devised in a way that provides benefits to the wealthiest segments of society. Indubitably, the elites themselves are the richest segment of society. However, their political influence thrives on patronage-based links and clientelism. So, they devise the policies while keeping their desire to give preferential treatment to big businesses, such as preferential bailouts, subsidies, loans, or access to them. As a result, small and medium enterprises (SMEs) face economic challenges and a less conducive environment to grow and evolve. According to the Small and Medium Enterprises Development Authority (SMEDA), despite the establishment of 36 Common Facility Centres nationwide through PSDP funding, financial constraints have halted many SMEs. Generally, Small and Medium Enterprises (SMEs) play a vital role in job creation and broad-based economic growth. Thus, broad-based economics is a mirage in the wake of tough challenges to the development of these enterprises.
• ✓Tax-Evasion and Regressive Tax- Systems are the Key Examples of Elite Influence that hinder Long-Term development
The country has a narrow tax base; however, the indirect taxes make the foundation of its revenue collection. Tax evasion and regressive tax systems are the key examples of elite influence on economic policy. According to Economic Survey of Pakistan, the tax-to-GDP ratio (federal taxes) fell to 9.6 percent in 2019-20 against 10.1 percent in 2018-19.The less dependence on direct taxes of the revenue system makes the country rely on indirect taxes, such as sales tax, which affect the marginalized sectors and the middle class of society. In addition, the tax exemptions work to the benefit of landowners and industrialists. However, the narrow tax base with low revenues causes a lack of investment in the social sectors, such as education, health, and infrastructure. In contrast, investing in social sectors is crucial for long-term economic stability and progress.
• ✓Abject Corruption in the Public Sector is a result of Elite Capture, exacerbating Fiscal Deficits and Weakening the Economic Progress
Policymakers and state officials are engaged in rent-seeking activities for financial gains via a patronage-client network, which inhibits transparency in financial transactions. The Corruption Perception Index (CPI) has ranked Pakistan 140th out of 180 countries. However, the revenues are required to finance human development programs. From patron to client, the network only secures the individual interests of the elites by extracting rents from the public revenues. As a result, the rent-seeking from public revenues led to large fiscal deficits that weakened economic stability.
• ✓Elite Capture has Contributed to Weak Governance, Creating an Environment that Impedes Financial Success
The elite capture on policy prohibits good governance in the country to sustain the patron-client network because good governance enhances transparency and applicability of law, which does not work for rent-seekers. As a result of weak governance, there is a less conducive environment that can foster economic success.
• ✓Military Influence on the Policy Making has Shrinked Resource Allocation for Human Development
Last but not least, the Military influence on the decision-making process sometimes overshadowed the civilian government. They captured policy-making processes in the defense and security-related areas, particularly towards real estate, telecommunications, and infrastructure. The significant military economic footprint shrinks resource allocation for social development, which is inevitable for long-term financial success.
Critical Analysis- Suggestions to Deal With the Issue
In an analysis, it is high time for institutional reforms to strengthen public institutions and enhance their efficacy. However, these reforms should address economic and social equality, marginalized groups, and social institutions. To reduce elite capture, the presence of democratic institutions and the rule of law is indispensable. For example, in Brazil, Anti-Corruption Derive (ACD) targeted political and business elites. However, the program has successfully disrupted corruption networks. Pakistan can adopt a similar approach by strengthening anti-corruption bodies like the National Accountability Bureau (NAB). For tax reforms, the country can take inspiration from Sweden’s progressive tax system, where high earners pay a share in the tax. In addition, the state can adopt a similar approach to India for electoral reforms by empowering the Election Commission of Pakistan (ECP). Other steps may include decentralization to discourage the power nexus and empower civil society and social media.
Conclusion
To conclude, the elite capture on public policy is one of the problems Pakistan has been facing in achieving long-term economic growth and stability, where the significant political position of the Military, feudal landlords, and their affiliated groups granted them strong influence in the decision-making cadre. First, the policies devised under the influence facilitate influential groups other than marginalized social groups.The policies give preferential treatment to big businesses, such as preferential bailouts, subsidies, loans, or access to them. As a result, small and medium enterprises (SMEs) face economic challenges and a less conducive environment to grow and evolve. Second, the tax exemptions work to the benefit of landowners and industrialists. The elite capture on policy prohibits good governance in the country to sustain the patron-client network for the sustainability of their financial gains. Last, the significant military economic footprint shrinks resource allocation for social development. All these factors impacted the economic development of the country. Thus, a pragmatic and realistic approach is the need of the hour to reduce the effect of these influential groups on the faltering economy.
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